Propriety Plants Must Now Pay Federal Minimums on New Milk Contracts

The American Taxpayer Relief Act expired yesterday, meaning that any new forward milk contracts written by proprietary plants require that those plants pay Federal Milk Marketing Order class minimums.

"Proprietary handlers establishing new forward contracts on or after Oct. 1, 2013 will not be exempt from paying minimum Federal Order prices," says Todd Wilson, a Federal Order Administrator based in Kansas City. "Previously established contracts that expire on or before September 30, 2015 are not impacted."

Beginning Oct. 1, USDA no longer has the authority to administer the Dairy Forward Price Program. But dairy farmers are still free to enter into forward price contracts with milk handlers. It’s just that proprietary handlers must now pay Class minimum prices which, in turn, will likely mean few will enter into new contracts.